Werner not deterred by July slowdown

Werner not deterred by July slowdown

Todd Maiden

Tue, August 11, 2026 at 11:54 PM GMT+3 4 min read

• WERN +3.90%
• DB +0.73%

Executives from Werner Enterprises sounded unfazed by the seasonal slowdown in truckload spot market trends during July. Chairman and CEO Derek Leathers told investors Tuesday that the supply-led recovery shows no signs of slowing as the current administration is not backing off its crackdown on bad actors.

Tender rejections peaked in June and spot rates have continued to slide from the Fourth of July (holiday) high. The summer lull has investors jittery. Second-quarter earnings reports were solid, but shares of most carriers have sold off by mid-single to mid-teen percentages since.

"There's no concern, if you will, from my perspective about … some of these little snippets of news that we've seen in July," Leathers said at Deutsche Bank's Chicago Industrials Summit.

The top of the funnel has been significantly constricted. Leathers estimates that 850 to 900 CDL schools have been forced to close due to insufficient training standards. That's in addition to roughly 10,000 training programs that have been removed from the FMCSA's Training Provider Registry.

Capacity has been significantly impacted by a crackdown on ELDs allowing operators to alter hours of service. As Leathers noted, "10 trucks were able to behave like 15."

Well before regulatory enforcement ramped up last year with stricter oversight of English-language proficiency and non-domiciled CDL restrictions, carriers were exiting the market due to weak economic conditions. After an extended downturn, numerous fleets continue to struggle to stay afloat, meaning the recent uptick in rates might have arrived too late for some.

Leathers also believes more enforcement is on the way as the FMCSA is likely to see an increase in funding from its annual budget allocation in October.

Even with only modest demand, Leathers said a supply-driven recovery has legs. "Christmas is still going to come. Peak season is still going to be a reality."

He noted an "increased acceptance" from shippers that the supply crunch "is real," which bodes well for an industry that "hasn't been reinvestable in several years."

Inventories at some of Werner's retail customers are a little lean while others are holding satisfactory stock levels. The company sees a normal peak season this year. But unlike last year's, this year's peak will have the benefit of significantly higher rates.

During the second quarter, Werner's (NASDAQ: WERN) one-way TL fleet saw a big turnaround following a restructuring.

Revenue per truck per week (excluding fuel surcharges) jumped 28% year over year, as miles per truck were up 16% and revenue per total mile increased 10%. The rate increase was notable as Werner had only half the spot market exposure it had a year ago, and length of haul was up nearly 100 miles. (Longer lengths of haul usually accompany lower per-mile rates.)

Under the restructuring plan, the company exited non-profitable accounts, and repurposed or disposed of under-utilized trucks. The one-way fleet was 34% smaller y/y at 1,700 units at the end of the second quarter. Higher pricing and better utilization pushed the total TL segment's adjusted operating ratio (inverse of operating margin) to 94.5%, 270 basis points better y/y.

Werner expects one-way rate per mile to increase by 10% to 13% y/y in the third quarter. With the turnaround largely complete, the company will now look to grow this fleet again.

The dedicated fleet, 80% of Werner's total TL network, is capturing low- to mid-single-digit contractual rate renewals. Revenue per truck per week (ex-fuel) was 5% higher y/y in the second quarter. Werner acquired dedicated carrier FirstFleet for $245 million in January. Excluding FirstFleet from the results, Werner's legacy dedicated operation recorded an 8% increase in revenue per truck per week. The metric is expected to increase by 3% to 5% y/y for full-year 2026.

While the consolidated TL margin was more than 10 percentage points worse than the prior peak, it was the unit's best performance since the 2023 fourth quarter. Management reiterated a path to low-double-digit margins during the middle of the freight cycle, which it said could occur next year. Higher rates, better demand, truck additions to existing dedicated accounts (no start-up cost offset), higher gains on sale as used prices rise (150 bps of margin alone), and automation and cost takeout initiatives are the levers.

Shares of WERN were down 0.7% on Thursday compared to the S&P 500, which was off 0.3%. Werner's stock is up 57% since spot rates first inflected positively ahead of Thanksgiving.

Why it matters? Werner's Tuesday presentation provided key insights into how current market and regulatory forces are driving improved financial results.

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